Sewerage bids in re-review

(CNS): Government’s derailed plans to sell off the country’s waste water system were apparently back on track Tuesday when a newly formed technical committee met with government officials from the ministry and other agencies to look again at the bids which have been waiting for several months to be reviewed. CNS understands that a number of conflicts of interest arose with members of the previous technical teams having direct connections to the bidders and others resigning for undisclosed reasons. The UDP administration has cited the privatization of Grand Cayman’s sewerage system as a public policy priority but the process has been littered with what the premier has often called stumbling blocks.

Government first asked for expressions of interest before putting out an official request for proposal (RFP), in February 2010, but received few takers and soon after toyed with the idea of selling or leasing the entire Water Authority. However, in the face of opposition and concern that selling one of the government’s most profit making assets might prove to be a short sighted move, among other unspecified problems, it reverted back to selling the wastewater management system as a separate entity.

An official full request for proposal was eventually published in October 2010 and legislative changes to facilitate the sale were passed in December of the same year.

Since then, however, the first technical committee convened to examine the ten bids submitted during the RFP process, which closed by the end of last year, was disbanded. It was understood that the chairman became the first member of the committee to be conflicted and resigned.

He was replaced soon after his departure but then another board member was reportedly also found to be conflicted — the details of which have never been disclosed. Shortly after that it is understood that all members of the technical committee, including the new chairman, resigned — which has also never been explained — leaving the bids in limbo.

CNS has contacted the ministry on a number of occasions about the problems plaguing the technical team, why the previous committee resigned and what the conflicts of interest might have been, but we are still waiting for answers to the questions. The role of any technical committee in a government procurement or sale is to examine all the bids based on the RFP documents and the technical elements and then make recommendations to the Central Tenders Committee, which in turn ensures the selection provides value for money for the public purse.

Since the last technical team departed in the middle of the reviews, the bids have been left hanging until Tuesday morning, 7 June, when a new technical team reportedly met to begin looking again at the bids.

Government is understood to be looking for at least CI$20 million for the sewerage system, which was valued by HSBC back in 2009 as part of the government’s bond offering at around US$23.3m. KPMG is understood to have undertaken another evaluation in April last year when it valued several of government’s assets but that document has never been released to the public.

Whoever eventually buys government’s sewage will be expected not only to manage and operate the existing system but to make investments for future improvements under an exclusive twenty-five year lease.

Aside from complying with all applicable local laws and regulations, the successful bidder will be required to satisfy all insurance, financial, and bonding requirements as specified in the RFP document; have no less than ten years prior experience with providing wastewater services for public authorities for systems serving at least 60,000 people, and demonstrate their ability for independent financing without the need for government guarantees.